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FINRA Arbitrators Lack Diversity, According to Investors Group

By Robert L. Hill, Esq. of Shustak Reynolds & Partners, P.C. posted on Tuesday, October 7, 2014.

A recent study from the Public Investors Arbitration Bar Association (PIABA), a group formed to assist investors in recovering investment losses, concludes that the arbitrator pool maintained by the Financial Industry Regulatory Authority (FINRA) lacks diversity.

The PIABA study found that investors often are forced to choose an arbitration panel from a pool consisting of mostly elderly men.  According to the investor group, males make up approximately 80% of the arbitrator pool while the average age of arbitrators is 69 years old.  PIABA maintains that this lack of diversity is a factor in the declining number of awards favoring investors.

 In July of this year, FINRA assembled a 13-person task force to review its arbitration procedures and identify areas that could be improved.  According to FINRA, the task force was empaneled to improve the transparency, impartiality, and efficiency of the arbitration process.

 FINRA’s arbitration division is the mandatory forum for most investors who bring claims against brokerage firms, stock brokers and financial advisors.  In addition, most financial advisors and employees of FINRA brokerage firms must bring any employment disputes in the FINRA arbitration forum.  Shustak Reynolds & Partners, P.C.’s securities and investment attorneys in San Diego, Irvine, San Francisco, and New York are highly experienced in handling FINRA customer and employment disputes, as well as FINRA and SEC investigations and enforcement proceedings.

To learn more contact our attorneys today.

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